Many seniors look forward to their retirement as a period in which they’ll have more time to follow their dreams, reconnect with friends and family, and jump back into hobbies they left behind when they were busy working and raising a family.
However, even after years of saving and contributing to retirement plans, many retirees may be overwhelmed by the challenge of balancing pursuing their renewed interests with budgeting for this new phase of their life. And for those families and seniors who are considering a senior living community, questions about cost and affordability are usually among the first to come to mind.
First and foremost, it is important to remember that your family does not have to face these concerns and answer these questions on its own. Based on our decades of experience helping families and seniors with transitions like these, we have pulled together some of our key money management tips to get your family off on the right foot.
Forty-nine percent of seniors are concerned that they will outlive their savings, according to the United States of Aging Survey. An additional 64 percent worry that healthcare costs will increase over the next 5-10 years. Add in fluctuations in the stock markets and, needless to say, money management becomes a key part of having a fulfilling retirement.
The first step families with seniors on the brink of retirement can take is to consider several key factors that will lay the foundation for their financial planning for the road ahead. Some of these key items include:
- Age and health — A senior’s health status, medical history and needs, and age can help to estimate for how many years each family will need their money to last.
- Sources of income — Though every family is unique, most retirees have two types of income: a reliable, usually monthly source such as a pension, annuity, or Social Security payment, and a retirement savings account such as an IRA or 401(k).
- Tax rules — Depending on your income sources, there may be different tax implications for each. Make sure you understand what (if any) taxes need to be paid for different disbursement scenarios.
- Money management experience — Though some feel comfortable actively managing their investments, others are more risk-averse and prefer the help of a financial adviser or even the comfort of a fixed annuity.
With the framework of a plan in place, families can then begin to figure out a money management plan that is best for them. Along the way, bring in trusted family members, financial advisers, and other resources to further strengthen your money management plan.
Budgeting for Senior Living
If a move to a senior living community is in your plans, a great first step toward figuring out how to make the move work is calculating your current and future living expenses. First, add up your current expenses, including the costs of current or future in-home senior care needs.
For help, use an interactive online price calculator to add up how much you pay for things such as mortgage or rent, utilities, home or renter’s insurance, property taxes, groceries, entertainment, maintenance or repairs, or transportation and vehicle costs. Current or potential in-home senior care and other costs like long-term care insurance or homeowner's association fees should also be factored in.
With these results in hand, you will be able to compare your current living expenses to different types of senior living while also identifying any services or amenities that you’re not receiving now but will need in the future.
When you’ve added up your current living expenses down to the last dime, you’ll be able to gauge how much (if any) additional money you’ll need to budget for monthly to pay for senior living.
Financial Benefits of Senior Living
After crunching all the numbers, considering the uncertainties and stresses of homeownership, and weighing the potential for in-home care, many families recognize the financial benefits of senior living. This is because senior living costs include shared or private apartments, meals, laundry and housekeeping, social activities, wellness activities, and transportation services at monthly, predictable rates.
In other words, the fact that seniors’ families will know what expenses they are likely to incur each month can help them to relax and enjoy their retirement more and plan for the future.
The Arbor Terrace team has worked with seniors for more than three decades, so we understand what it takes to plan for retirement. We would love to connect with you and share even more resources to help you right here in our own community. Give us a call today to learn more!